$13 Million Dollar Property Transaction by Globex Mining Provides Significant Shareholder Value

Deal flow for resource property assets has slowed down somewhat from the torrid pace achieved during recent years. Nonetheless, strong demand for resources will continue to drive active exploration as new deposits are urgently needed to maintain supplies for many critical raw materials. Globex Mining Enterprises Inc. (CA: GMX – $0.73 & US: GLBXF – $0.53 & GER: G1MN – €0.53) is ideally positioned to capitalize on this trend, with a portfolio of more than 200 property assets. The Company has already demonstrated a successful track record to achieve significant transactions. This strategy has resulted in substantial capital gains for Globex and the opportunity to participate as a suite of projects advance through aggressive exploration that is funded by other companies.

This week, Globex announced yet another high-value transaction, vending control of the advanced Duquesne West/Ottoman property through an option deal. The Duquesne West/Ottoman project is held in a corporate partnership structure, Duparquet Assets Ltd. Globex controls 50% ownership of Duparquet while Jack Stoch, President & CEO of Globex, owns the other half of Duparquet. This ownership structure was established prior to the founding of Globex and remains in place.

Duquesne West/Ottoman is comprised of 38 claims covering a surface area of nearly 1400 hectares. The property package is located in the Province of Quebec, roughly 32kms to the Northwest of the important mining center Rouyn-Noranda.

The Porcupine-Destor Break, a regional structural feature, runs right through the property. Numerous historic gold mines operated in this district including the past producing Beattie and Dorchester mines. Duquesne West/Ottoman is located just 4km along strike from these mines, and less than 4km from the high-grade Duquesne Mine further east along trend.

Attractive Gold Resources at Duquesne West/Ottoman

Duparquet originally secured control of this property based on the exploration potential within this prolific gold district. At that time, a legacy resource had been identified within the land position, estimated at about 100,000 ounces of gold. Several promising option deals were arranged in the following years as many other companies were attracted by this discovery potential. These partners included Noranda Exploration, Queenston Mining, Kinross Gold and Xmet Inc. The combined exploration activity led to the completion of more than 110,000 meters of total drilling work. Globex received payments in cash and shares of partner companies through these previous deals. More importantly the substantial work history completed by former option partners advanced the project further along the value curve.

In September 2011, a NI43-101 technical report for the project was presented by Xmet, Inc. An Inferred Resource of 853,000 ounces of gold (uncut) with an average grade of 6.36 g/t was established within eight gold bearing zones outlined at Duquesne West/Ottoman. Shortly thereafter, Xmet was unable to fulfill the option terms and Duparquet resumed full ownership of the property.

The significant estimated gold resources of the property, along with the substantial historic database of previous work, attracted a new option partner to the Duquesne West/Ottoman project. As part of its due diligence process, Emperor Metals Inc. [AUOZ] evaluated the historical exploration data using Artificial Intelligence to reinterpret the geological model for the property. The revised model revealed the potential for additional gold discovery potential, highlighting gold trends unknown to previous operators of the project. This prompted Emperor Metals to negotiate the option deal.

Emperor Metals Agrees to Premium Valuation to Acquire Duquesne West/Ottoman Property

With each iteration of the transaction partner strategy, the value of Duquesne West/Ottoman was enhanced as the gold endowment of the property was increased. This contributed to greater transaction value as subsequent option deals were negotiated. The process culminated with the exceptional deal reported by Globex for the property this week.

Emperor Metals committed to a premium transaction value to acquire the project. The front end commitments include total cash payments of $10 million plus at least 15 million shares payable, structured over a term of 5 years. If the value of Emperor shares drops below $0.20 per share during the anniversary of each year during the term, a schedule of additional share payments was also agreed to upgrade the value of these installments.

In addition, Emperor shall fund the significant work commitment for at least $12 million in exploration activity through the duration of the agreement. This ensures aggressive exploration activity continues at the project to follow up on previous discovery success. If this work reveals additional resources to achieve a gold-equivalent resource estimate of at least one million ounces in all categories (measured, indicated and inferred) then Emperor must issue an additional payment of 2,500,000 shares to Duparquet. Knowing that the property already has a resource of 853,000 ounces of gold, it is very logical that Emperor will cross the one million ounces threshold.

Lastly, Duparquet retains a 3% Gross Metals Royalty on the project. Emperor may repurchase one third of this royalty at any time for $1 million. With 50% ownership of Duparquet in hand, Globex adds yet another highly prospective royalty interest to its portfolio of advanced projects with the potential to emerge as mine development candidates.

Conclusion

In yet another blockbuster transaction, Globex has once again demonstrated the effectiveness of its business model to create shareholder value. The Duquesne West/Ottoman property is situated within a prolific mining jurisdiction and located on strike with other gold mines in the vicinity. High grade gold was encountered in multiple phases of exploration as completed by several former operators of the project. Combined with other favorable aspects to the property, including the large size of the land position and the advanced status with a compliant gold resource, the market value for Duquesne West/Ottoman commanded a high premium.

Once again, in this transaction with Emperor Metals, Globex was able to achieve a deal value that unlocks this value proposition on multiple levels. Cash payments amount to $10 million. The additional consideration for at least 15 million shares of Emperor Metals in the deal provides significant minority ownership of a transaction partner. An incentive payment of 2.5 million shares represents an attractive bonus proposition, if Emperor is able to achieve at least a one million ounces of gold resources at Duquesne West/Ottoman. The aggressive exploration commitment incentivizes Emperor Metals to achieve this milestone. Thereafter, the royalty held on the property provides value potential on the backend if the project advances through to mine development.

Through the ownership structure of Duparquet, Globex earns half of this impressive windfall payout. The transaction value is a gift that keeps on giving, considering that the partnership has already received substantial payments through previously structured deal flow in which the project eventually reverted back to full ownership by Duparquet. Ideally Emperor Metals will be successful to complete all of its commitments in this latest option deal and Globex may anticipate realizing the full value for its share of this property transaction. Smallcaps Recommendation: BUY.

Smallcaps.us Advice: Buy	Price Target: $2.87	Latest Company Report (pdf)
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